Plaintiffs appeal the trial court's judgment denying attorney fees in this
corporate derivative suit. Defendant (1) raises several cross-assignments of error,
arguing, in part, that, because the merits of the underlying dispute had become moot
before the trial court addressed plaintiffs' asserted entitlement to fees, the trial court
lacked jurisdiction to enter any judgment other than a judgment of dismissal. We agree
with defendant. See Kay v. David Douglas Sch. Dist. No. 40, 303 Or 574, 738 P2d 1389
(1987), cert den, 484 US 1032 (1988). Accordingly, we vacate the trial court's judgment
and remand with instructions to dismiss the case as moot.

The facts that are material to our analysis and disposition are undisputed.
This litigation arose from the proposed, and eventually completed, acquisition of
Willamette Industries, Inc., (Willamette) by Weyerhaeuser Co. (Weyerhaeuser).
Plaintiffs, Crandon Capital Partners (Crandon) and Rae Ann Brown (Brown), owned
shares of Willamette.

In November 2000, Weyerhaeuser offered to purchase all of Willamette's
outstanding shares for $48 per share. That $48 offer was greater than the value of the
stock at that time. Willamette rejected Weyerhaeuser's offer outright. On November 14,
2000, several days after Willamette's rejection, plaintiffs Crandon and Brown
simultaneously filed derivative lawsuits on behalf of Willamette against the corporation
and its directors. Those two suits, which were filed in Multnomah County Circuit Court,
were consolidated on December 20, 2000.

During the pendency of the litigation, Weyerhaeuser continued in its
attempt to purchase Willamette. However, on December 10, 2001, Willamette announced
that it was beginning its own negotiations with Georgia Pacific Corp. (GP) to purchase
GP's building products division. Weyerhaeuser made it clear that the proposed deal with
GP would render Willamette undesirable and that, if the transaction were completed,
Weyerhaeuser would discontinue its efforts to acquire Willamette.

Crandon and Brown regarded the potential GP transaction as a further
entrenchment measure (a "suicide pill") designed to thwart Weyerhaeuser's advances.
Consequently, on December 18, 2001, plaintiffs filed a second amended complaint, which
styled the proposed GP transaction as an unlawful entrenchment measure; plaintiffs again
sought an injunction, attorney fees, and damages.

Willamette moved to consolidate the Wyser-Pratt action with the previously
filed Crandon and Brown actions. Wyser-Pratt moved for expedited discovery and a
preliminary injunction to stop the GP acquisition. On January 16, 2002, the trial court
heard arguments on both Willamette's motion to consolidate and Wyser-Pratt's motion for
expedited discovery. Although attorneys for Crandon and Brown were present at the
hearing, only attorneys for Wyser-Pratt presented argument. After ruling that the three
actions would be consolidated, the court commented:

"[I]t seems to me, from the plaintiffs' allegations, [that the GP acquisition
is] something that would in fact--affirmative steps, maybe not completed
yet, but affirmative steps that would prevent the takeover and entrench the
board."

After the court made those comments, but before the court rendered any ruling,
Willamette's attorneys stipulated that Willamette would allow at least 48 hours between
the time it announced an agreement with GP and the time it finalized that transaction.
The 48-hour waiting period would allow plaintiffs and the court to review the final terms
of any acquisition agreement.

On January 21, 2002, Willamette accepted Weyerhaeuser's offer and agreed
to sell at a price of $55.50. Thereafter, the tender price was paid out to the shareholders.
Plaintiffs never sought to restrict or enjoin the distribution of any part of those funds as a
possible source of the payment of attorney fees.

On March 21, 2002, two months after Willamette accepted Weyerhaeuser's
offer, plaintiffs filed a motion for an award of attorney fees. The gravamen of that
motion was that plaintiffs were entitled to attorney fees because plaintiffs' efforts had
"force[d] defendants to comply with their fiduciary obligations to the Company and its
shareholders and respond to Weyerhaeuser's offers in good faith." Plaintiffs contended
further:

"Now, after 15 months of litigation, defendants have finally caved in,
removed their improper defensive measures, agreed to a merger between
Willamette and Weyerhaeuser, and abandoned a proposed acquisition by
Willamette of the liability-ridden building products division of [GP]. By
acquiescing to demands made by plaintiffs, defendants have conceded to
plaintiffs' primary claims. Continued litigation of plaintiffs' claims is not
necessary as plaintiffs have obtained the substantive relief they sought."

The court denied that motion based on defendants' assertion that plaintiffs' second
amended complaint did not comply with ORCP 68. However, the court, over defendants'
objections, allowed plaintiffs to file a third amended complaint solely to seek fees.

On December 5, 2003, after a series of motions and hearings related to
plaintiffs' third amended complaint, the trial court held a hearing addressing issues of fee
entitlement. Ultimately, after reviewing voluminous submissions on fee entitlement in
corporate derivative suits, with particular emphasis on Delaware case law addressing
arguably analogous circumstances, the court determined that plaintiffs were not entitled to
recover fees. That ruling rested on two principal premises: First, the primary benefit that
plaintiffs had sought was enhancement of the price of Willamette shares, including
through Willamette's acceptance of Weyerhaeuser's tender offer. Second, in derivative
cases involving claims for attorney fees based on securing such a common pecuniary
benefit, a plaintiff is required to enjoin the distribution of at least a portion of the tender
price so as to segregate and maintain a fund from which fees can be paid by those who
benefitted from the attorneys' efforts. That is, as an equitable matter, the benefitted
shareholders of the acquired company--and not the shareholders of the acquiring
company--should bear the cost of efforts that increased the buyout price. Because that
prerequisite was not met here--the tender price had been fully disbursed--plaintiffs could
not recover fees. The trial court explained:

"[W]hat I see in all of these [Delaware] cases is that the * * * common fund
or corporate benefit exception is a[n] exception to the American rule for
attorneys fees, and it is based on the notion that it would be more equitable
to require those who are benefitted to pay the attorneys fees and that it
enhances certain public policies in terms of encouraging enforcement of
shareholders' rights to do that. But the first and foremost underlying
premise is those who benefitted should pay, whether it's common fund or
corporate benefit.

"The gravamen of the benefit in this case, even though it would be
extremely difficult [to measure] is, in fact, in the increased dollar value
received by the shareholders as a result of Willamette's board finally
agreeing to the tender offer and, frankly, driving up Weyerhaeuser's bid.
And it's for that reason that this method of having funds segregated for the
tender offer for the payment of fees and expenses has been developed,
because that's the benefit * * * even if you characterize it as a dismantling
of these barriers and elimination of this improper entrenchment activity, the
bottom line is that it only matters because the price for shareholders went
up, they got more value. But they were cashed out. They didn't become
shareholders in the new corporation * * *. And I conclude that * * * the
plaintiffs having shown no good reason not to have sought a segregation of
the funds, it would be inequitable at this point to require the successor to
pay the attorney fees."

Crandon and Brown now appeal. (5) They contend, variously, that the
trial court misconstrued and misapplied the law pertaining to the recovery of attorney fees
under a corporate "common benefit" theory and that the court was wrong in concluding
that, in the absence of a retained monetary fund, it would be inequitable to require
Weyerhaeuser, as defendants' successor, to pay plaintiffs' attorney fees.

Defendant disputes those arguments and, further, raises a variety of cross-assignments of error. Two of those cross-assignments are closely related and pertain to
matters that necessarily precede our consideration of plaintiffs' arguments: (1) The trial
court erred in failing to dismiss this case because the merits of the parties' underlying
dispute had been mooted long before the court entered judgment denying attorney fees;
and (2) even if the case was not moot, the court erred in failing to deny fees on the ground
that, because plaintiffs had not "prevailed" in the underlying litigation, they could not
recover attorney fees.

The first of those cross-assignments is dispositive. For the reasons that
follow, we conclude that the trial court lacked jurisdiction to consider plaintiffs' request
for fees.

We begin with an overview of Oregon's mootness doctrine. Under Oregon
law, a case becomes moot when the interests of the parties cease to be adverse, Barcik v.
Kubiaczyk, 321 Or 174, 182, 895 P2d 765 (1995), or when "a court's decision no longer
will have a practical effect on or concerning the rights of the parties[.]" Brumnett v.
PSRB, 315 Or 402, 406, 848 P2d 1194 (1993). "Mootness is a species of justiciability,
and a court of law exercising the judicial power of the state has authority to decide only
justiciable controversies." First Commerce of America v. Nimbus Center Assoc., 329 Or
199, 206, 986 P2d 556 (1999). Thus, "[i]n Oregon, the judicial power simply does not
extend to moot or otherwise nonjusticiable matters." Starrett v. City of Portland, 196 Or
App 534, 539, 102 P3d 728 (2004).

Here, Willamette's acceptance of Weyerhaeuser's tender offer and
Weyerhaeuser's consequent acquisition of Willamette rendered plaintiffs' claims in the
derivative litigation nonjusticiable. There no longer was any live controversy with
respect to the compelled dismantling of the alleged "entrenchment measures." The
question reduces to whether that mooting of the "merits" of the parties' dispute deprived
the trial court of jurisdiction to adjudicate plaintiffs' alleged entitlement to attorney fees.
Kay is dispositive.

The defendants appealed, and the Supreme Court remanded the case to the
circuit court with instructions to vacate the judgment. The court identified the threshold
"problem" as "whether a justiciable controversy between the parties existed at the time of
the circuit court's judgment." Id. In that regard, the court observed:

"A party with standing under the various applicable tests might, of course,
seek relief against future repetitions of the challenged governmental act, but
these plaintiffs presented no such claims to the circuit court. And a court
cannot either mandate or enjoin an act after it has been completed, at least
not until the cosmological theory of reversible time is better established."

Id. The court then determined that the trial court's oral remarks at the show cause hearing
did not constitute an "order or a judgment." Id. at 578. Accordingly, the court concluded:

"[T]here was no effective judgment until it was signed and entered
according to ORCP 70 B. On the face of the pleadings and the interests
asserted by these plaintiffs, there was by that date nothing for the court to
decide. The circuit court should have dismissed the proceedings after the
commencement exercises were over. * * * As the judgment for attorney fees
would fall along with the belated judgment entered by the circuit court,
defendants' reason for maintaining their appeal also would disappear."

Id. at 579 (footnotes omitted; emphasis added).

Our own decisions accord with that analysis. For example, in Tanner v.
OHSU, 157 Or App 502, 971 P2d 435 (1998), we held that an award of fees against
certain defendants was jurisdictionally erroneous because the underlying merits as to
those defendants had become moot prior to the judgment. In Tanner, three employees of
OHSU sought relief from the denial of health benefits to their same-sex partners. They
named OHSU and a group of related state agencies as defendants. The trial court granted
an injunction and attorney fees to the plaintiffs against all defendants. However, before
entry of the trial court's judgment, the legislature had transformed OHSU into a public
corporation that operated independently of the various state agency defendants. Id. at
505. After the judgment, but before the appeal, OHSU adopted new policies allowing
same-sex partner benefits; however, OHSU continued to maintain on appeal that it was
not legally obligated to extend benefits. Id. at 509.

In analyzing mootness, we distinguished between the state agency
defendants and OHSU. Regarding the state agency defendants, we held that, "because at
the time of the entry of judgment the trial court had no authority to enter any judgment
against the state defendants, the entire case against those defendants--merits and award of
attorney fees--is moot." Id. at 513 (emphasis in original). Conversely, with respect to
OHSU, we held that the appeal was still justiciable because of that defendant's insistence
that it was not legally obligated to extend benefits and the concurrent potential that, if the
appeal were dismissed, OHSU would reinstate its former practices. Id. at 510; accord
Safeway, Inc. v. OPEU

, 152 Or App 349, 355, 954 P2d 196 (1998) (appeal was justiciable
because, despite the fact that the defendant had unilaterally ceased the challenged
conduct, the plaintiff sought to enjoin future conduct by the defendant, the defendant
continued to maintain its legal entitlement to engage in the challenged conduct, and the
potential for recidivism was strong).

The present case is indistinguishable substantively from Kay, and closely
analogous to the circumstances of the state agency defendants in Tanner. Here, plaintiffs'
claims related to the elimination of the alleged "entrenchment measures" so as to facilitate
Weyerhaeuser's acquisition of Willamette. When that transaction was complete--as when
the high school commencement occurred, or when the state agencies' authority over
OHSU was statutorily eliminated--the parties' dispute ended. At that point, any decision
of the trial court would no longer have had "a practical effect on or concerning the rights
of the parties[.]" Brumnett, 315 Or at 406. Consequently the court should have dismissed
the case as moot.

Conversely, the circumstances here are distinguishable from those of the
OHSU defendants in Tanner and the defendants in Safeway. In those cases, the plaintiffs
sought to enjoin future conduct, the defendants maintained that they had a legal right to
engage in future conduct, and the courts determined that a future dispute was likely. See
Tanner, 157 Or App at 510; Safeway, 152 Or App at 355. None of those factors is
present here. The Willamette/Weyerhaeuser transaction is complete; plaintiffs did not
seek to enjoin continuing future conduct; and no risk exists in the future for the conduct at
issue. To paraphrase Justice Linde in Kay, unless or until time can be reversed,
defendants' ability to maintain entrenchment measures to thwart Weyerhaeuser's takeover
ended when Weyerhaeuser took over Willamette. In sum, this is not a case where the
defendants ceased their wrongful behavior only to leave themselves "free to return to
[their] old ways." Gates v. McClure, 284 Or 685, 689, 588 P2d 32 (1978). Rather, this is
a case where the parties' adverse interests simply ceased to exist.

We thus conclude that plaintiffs' claims became moot when Weyerhaeuser
acquired Willamette. Thereafter, the trial court lacked jurisdiction to render any
disposition other than dismissing the case for lack of justiciability. Kay, 303 Or at 579;
Tanner, 157 Or App at 513.

Plaintiffs maintain, nevertheless, that they can avoid mootness by way of
invoking a "catalyst theory." Under such a theory, as recognized and applied in courts in
many other jurisdictions, a plaintiff may, in certain circumstances, be deemed to be a
"prevailing party" entitled to attorney fees if, in response to the prosecution of litigation,
the defendant has unilaterally altered its conduct and afforded the requested relief,
precluding entry of judgment on the merits. See generally Brennan v. La Tourelle
Apartments, 184 Or App 235, 244, 56 P3d 423 (2002) (addressing generic operation of
the "catalyst theory"). Perhaps the most familiar recognition of the "catalyst theory" is
with respect to attorney fee awards pursuant to 42 USC section 1988 in federal civil rights
litigation under 42 USC section 1983. In that context, one federal court of appeals has
summarized the "catalyst theory" as follows:

"Where a defendant voluntarily complies with a plaintiff's requested relief,
thereby rendering the plaintiff's lawsuit moot, the plaintiff is a 'prevailing
party' under [42 USC] section 1988 if his suit is a catalyst for the
defendant's voluntary compliance and the defendant's compliance was not
gratuitous, meaning the plaintiff's suit was neither 'frivolous, unreasonable
[n]or groundless.'"

Little Rock School Dist. v. Special School Dist. 1, 17 F3d 260, 262 (8th Cir 1994)
(alteration in original). Thus, the "catalyst theory," as recognized in other jurisdictions,
deems the plaintiff to have "prevailed" concurrently with the defendant's (otherwise
mooting) "voluntary compliance." That characterization, in turn, obviates application of
the principle that the mooting of the merits before entry of judgment deprives the court of
jurisdiction to award attorney fees.

Despite the prevalence of the "catalyst theory" in other jurisdictions, no
reported Oregon decision has ever adopted such an approach. See, e.g., Conifer Ridge
Homeowners Assn. v. Hayworth, 176 Or App 603, 610, 32 P3d 929 (2001) (so stating).
We decline plaintiffs' invitation to do so in this case for two reasons. First, adoption of a
"catalyst theory" cannot be squared with Kay. Although nothing in Kay itself addresses
the potential availability of a "catalyst theory"--and our own examination of the briefing
there also yields no such references--recognition of a "catalyst theory" cannot be
reconciled with Kay's analysis and disposition. Indeed, the plaintiffs' claims in Kay
included a claim under section 1983, with a concomitant request for fees under 42 USC
section 1988. Kay, 303 Or at 576, 578 n 2.

Second, even if Kay were, somehow, not dispositive, plaintiffs' claims here
would not fall within the contours of the "catalyst theory" as it has been commonly
defined and applied. In Brennan, a case in which we declined to apply the "catalyst
theory" with respect to an entitlement to attorney fees under the fee provision of the
Residential Landlord and Tenant Act, ORS 90.255, we observed:

"While the public has an interest in compliance with civil rights laws
without the need for litigation and an award of attorney fees against an
offender who capitulates after the action is filed will further such an
interest, that kind of public interest is lacking in a dispute over whether a
landlord is in possession of a tenant's property. In the latter situation, there
is no fundamental principle at stake expressed by a law in which the
members of the public have a direct interest. Rather, the dispute is between
private parties. Indeed, to adopt a catalyst rule under such circumstances
does not motivate public compliance with some fundamental concept of
civil liberty. Rather it encourages costly litigation and provides a motive to
seek a court-ordered remedy as opposed to settling such disputes without
the need for litigation."

184 Or App at 245. The same is true here. This case involved a purely economic dispute
"between private parties"; there was "no fundamental principle at stake expressed by a
law in which the members of the public have a direct interest." Id. Thus, even if a
"catalyst theory" were somehow cognizable under Oregon law, it would not apply here.

The trial court lacked jurisdiction to adjudicate plaintiffs' request for
attorney fees. Accordingly, we vacate the judgment and remand it to the trial court to
dismiss the case as moot. Poddar v. Clatsop County, 167 Or App 162, 171, 2 P3d 929,
adh'd to on recons, 168 Or App 556, 7 P3d 677, rev den, 331 Or 193 (2000).

2. "A golden parachute is a contractual arrangement between [a corporation] and one
or more executive officers whereby the [corporation] promises to provide the executive with
substantial benefits over and above those the executive would normally receive if the officer is
terminated as a result of a change in corporate control." Carol Goforth, Proxy Reform as a
Means of Increasing Shareholder Participation in Corporate Governance: Too Little, But Not
Too Late, 43 Am U L Rev 379, 424 n 271 (1994).

3. "Poison pills, often euphemistically labeled by their creators as 'shareholder rights
plans' are a variety of options or other rights issued to shareholders, effective only when another
party buys a specified percentage of stock or otherwise makes an unwelcome move toward
control of the corporation." Robert C. Art, Takeover Legislation: Oregon's Four Approaches to
Corporate Protection, 30 Willamette L Rev 223, 226 n 11 (1994).